Australia Market ends softer on trade worries

Headline indices of the Australia share market closed marginally lower on Tuesday, 03 September 2019, as risk sentiments remain subdued amid lingering worries over the trade war between world's two-biggest economies after Chinese and American officials struggle to schedule a planned meeting this month to continue trade talks and as Beijing said it had lodged a complaint against Washington with the World Trade Organization. At closing bell, the benchmark S&P/ASX200 index declined 6.01 points, or 0.09%, to 6573.40, while the broader All Ordinaries shed 4.02 points, or 0.06%, to 6,673.50.

The uncertainty about the US-China trade continues to rule the markets. Markets remain sensitive to the twists and turns on trade with the chances of a resolution between the world's two-biggest economies appearing more out of reach. Damage from the uncertainty is now being reflected in economic data: a slide in China's official purchasing managers' index highlighted pressures facing the world's second-largest economy from escalating tensions. Violent confrontations in Hong Kong are also weighing on sentiment.

 

Shares of metals and mining sector, which are heavily dependent on China, lost ground, with global miners BHP Group and Rio Tinto traded between 0.1% and 0.6% lower.

Financial stocks fell after trading in positive territory for most of the session, with the country's top lender Commonwealth Bank of Australia down 0.2%.

Energy shares closed higher, despite a slump in global crude prices on demand concerns, with Oil Search climbing as much as 1.4%, despite trading ex-dividend, ahead of a decision by the PNG government on a gas deal in which Oil Search is a partner France's Total SA .

ECONOMIC NEWS: Australia Current Account Registers First Surplus In 44 Years In Q2--Australia's current account surplus totaled A$5.85 billion in the June quarter versus a deficit of A$1.12 billion in the preceding quarter, data released by the Australian Bureau of Statistics showed Tuesday. Another report showed a decline in retail sales for the first time in three months in July. The balance on goods and services surplus rose A$5.06 billion to A$19.89 billion. The primary income deficit fell A$1.57 billion to A$13.92 billion. Data showed that the rising exports and falling imports resulted in an expected contribution of 0.6 percentage points to GDP growth in the June quarter.

Reserve Bank of Australia holds rates unchanged The Monetary Policy Board of the Reserve Bank of Australia on Wednesday (03 September 2019) decided to leave its benchmark rates unchanged at its current level of 1.00%. The Bank in its statement said, the outlook for the global economy remains reasonable, although the risks are tilted to the downside. The Bank expects its reasonable to have an extended period of low interest rates to make progress in reducing unemployment and achieve more assured progress towards the inflation target.

CURRENCY NEWS: The Australian dollar declined to a fresh 10-and-a-half year low against greenback on Tuesday, after the Reserve Bank announced its latest decision to leave interest rates on hold. The Australian dollar declined to $0.6710 around late afternoon today from yesterday close of $0. 6727.

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